Exhibit 10.17
Level 3 Officer Agreement
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into this 1/st/
day of October, 2002 by and between PSS World Medical, Inc., a Florida
corporation (hereinafter, the "Company" which term shall include the Company's
other subsidiaries, affiliates and successors), and Xxxx Xxxxxxx (hereinafter,
"Executive").
BACKGROUND
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The Company desires to engage Executive in the executive capacities set forth
herein, in accordance with the terms and conditions of this Agreement. Executive
is willing to serve as such in accordance with the terms and conditions of this
Agreement.
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Effective Date. This Agreement is effective as of October 1, 2002 (the
"Effective Date").
2. Employment. Executive is currently employed as the President of [Gulf South
Medical Supply, a subsidiary or division of] PSS World Medical, Inc. The purpose
of this Agreement is to set forth the terms of Executive's employment.
Executive's responsibilities under this Agreement shall be in accordance with
the policies and objectives established by the Chief Executive Officer or the
Board of Directors of the Company (the "Board") and shall be consistent with the
responsibilities of similarly situated executives of comparable companies in
similar lines of business.
3. Employment Period. Unless earlier terminated herein in accordance with
Section 7 hereof, Executive's employment shall be for a two-year term (the
"Employment Period"), beginning on the Effective Date. The Employment Period
shall, without further action by Executive or the Company, be extended by an
additional one-year period on each anniversary of the Effective Date; provided,
however, that either party may, by notice to the other, cause the Employment
Period to cease to extend automatically. Upon such notice, the Employment Period
shall terminate upon the expiration of the then-current term, including any
prior extensions. Notwithstanding the foregoing, if a Change in Control occurs
the Employment Period shall be automatically extended through the later of (i)
the second anniversary of the Change in Control, or (ii) the normal expiration
of the then-current term, including any prior extensions.
4. Extent of Service. During the Employment Period, and excluding any periods
of vacation and sick leave to which Executive is entitled, Executive agrees to
devote his business time, attention, skill and efforts exclusively to the
faithful performance of his duties hereunder; provided, however, that it shall
not be a violation of this Agreement for Executive to (i) devote reasonable
periods of time to charitable and community activities and, with the approval of
the Company, industry or professional activities, and/or (ii) manage personal
business interests and investments, so long as such activities do not materially
interfere with the performance of Executive's responsibilities under this
Agreement.
5. Compensation and Benefits.
(a) Base Salary. During the Employment Period, the Company will pay to
Executive a base salary in an amount not less than that in effect for Executive
on the Effective Date ("Base Salary"), less normal withholdings, payable in
equal monthly or more frequent installments as are customary under the Company's
payroll practices from time to time. The Compensation Committee of the Board
shall review Executive's Base Salary annually and in its sole discretion,
subject to approval of the Board, may increase Executive's Base Salary from year
to year. The annual review of Executive's salary by the Board will consider,
among other things, Executive's own performance and the Company's performance.
(b) Incentive, Savings and Retirement Plans. During the Employment Period,
Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs applicable generally to level
3 officers of the Company and its affiliated companies ("Peer Executives"), and
on the same basis as such Peer Executives.
(c) Welfare Benefit Plans. During the Employment Period, Executive and
Executive's family shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and programs provided
by the Company and its affiliated companies (including, without limitation,
medical, prescription, dental, disability, employee life, group life, accidental
death and travel accident insurance plans and programs) to the extent applicable
generally to Peer Executives.
(d) Expenses. During the Employment Period, Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by Executive
in accordance with the policies, practices and procedures of the Company and its
affiliated companies to the extent applicable generally to Peer Executives.
(e) Fringe Benefits. During the Employment Period, Executive shall be entitled
to fringe benefits in accordance with the plans, practices, programs and
policies of the Company and its affiliated companies in effect for Peer
Executives.
6. Change in Control. A "Change in Control" shall mean:
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(a) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of either (i) 25% or more of
the then outstanding shares of common stock of the Company ("Company Common
Stock"), or (ii) securities of the Company representing 25% or more of the
combined voting power of the then outstanding securities of the Company eligible
to vote for the election of directors (the "Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change in Control: (w) an acquisition
directly from the Company, (x) an acquisition by the Company or any corporation
controlled by the Company, (y) an acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (z) any acquisition pursuant to a Non-Qualifying
Transaction (as defined in subsection (c) of this definition); or
(b) Individuals who, as of the Effective Date, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the Effective Date whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to the election
or removal of directors ("Election Contest") or other actual or threatened
solicitation of proxies or consents by or on behalf of any Person other than the
Board ("Proxy Contest"), including by reason of any agreement intended to avoid
or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent
Director; or
(c) Consummation of a reorganization, merger or consolidation, statutory share
exchange or similar form of corporate transaction involving the Company or a
corporation controlled by the Company, or the sale or other disposition of all
or substantially all of the Company's assets, or the acquisition by the Company
of assets or stock of another corporation (any of such transactions, a "Business
Transaction"), unless immediately following such Business Transaction, all of
the following are true: (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the outstanding
Company Common Stock and outstanding Company Voting Securities immediately prior
to such Business Transaction beneficially own, directly or indirectly, more than
60% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries, the "Surviving Corporation") in substantially the same proportions
as their ownership, immediately prior to such Business Transaction of the
outstanding Company Common
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Stock and outstanding Company Voting Securities, as the case may be, and (ii) no
Person (other than (x) the Company or any subsidiary of the Company, (y) the
Surviving Corporation or its ultimate parent corporation, or (z) any employee
benefit plan (or related trust) sponsored or maintained by any of the foregoing)
beneficially owns, directly or indirectly, 25% or more of the total common stock
of the Surviving Corporation or 25% or more of the combined voting power of the
then outstanding voting securities eligible to elect directors of the Surviving
Corporation, except to the extent that such ownership existed prior to the
Business Transaction, and (iii) at least a majority of the members of the board
of directors of the Surviving Corporation were members of the Incumbent Board at
the time of the Board approval of the execution of the initial agreement
providing for such Business Transaction (any Business Transaction which
satisfies all of the criteria specified in (i), (ii) and (iii) above shall be
deemed to be a "Non-Qualifying Transaction").
(d) If Executive's employment responsibilities are primarily with Diagnostic
Imaging, Inc., a disposition by the Company of a majority of the stock or
substantially all of the assets of Diagnostic Imaging, Inc.; provided, however,
that if Executive is offered and accepts a position with the Company or another
subsidiary or division of the Company immediately following such disposition of
Diagnostic Imaging, Inc., then a Change of Control shall not be deemed to have
occurred by virtue of this subsection (d); or
(e) If Executive's employment responsibilities are primarily with Gulf South
Medical Supply, Inc., a disposition by the Company of a majority of the stock or
substantially all of the assets of Gulf South Medical Supply, Inc.; provided,
however, that if Executive is offered and accepts a position with the Company or
another subsidiary or division of the Company immediately following such
disposition of Gulf South Medical Supply, Inc., then a Change of Control shall
not be deemed to have occurred by virtue of this subsection (e); or
(f) If Executive's employment responsibilities are primarily with the Physician
Sales & Service division of the Company, a disposition by the Company of
substantially all of the assets of such division; provided, however, that if
Executive is offered and accepts a position with the Company or another
subsidiary or division of the Company immediately following such disposition of
the Physician Sales & Service division, then a Change of Control shall not be
deemed to have occurred by virtue of this subsection (f).
7. Termination of Employment.
(a) Death, Retirement or Disability. Executive's employment shall terminate
automatically upon Executive's death or Retirement during the Employment Period.
For purposes of this Agreement, "Retirement" shall mean normal retirement as
defined in the Company's then-current retirement plan, or if there is no such
retirement plan, "Retirement" shall mean voluntary termination after age 65 with
ten years of service. If the Company determines in good faith that the
Disability of Executive has occurred during the Employment Period (pursuant to
the definition of Disability set forth below), it
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may give Executive written notice in accordance with Section 15(f) of this
Agreement of its intention to terminate Executive's employment. In such event,
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such written notice by Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, Executive shall
not have returned to full-time performance of Executive's duties. For purposes
of this Agreement, "Disability" shall mean a mental or physical disability as
determined by the Board in accordance with standards and procedures similar to
those under the Company's employee long-term disability plan, if any. At any
time that the Company does not maintain such a long-term disability plan,
Disability shall mean the inability of Executive, as determined by the Board, to
perform the essential functions of his regular duties and responsibilities (with
or without reasonable accommodation) due to a medically determinable physical or
mental illness which has lasted (or can reasonably be expected to last) for a
period of six consecutive months.
(b) Termination by the Company. The Company may terminate Executive's
employment during the Employment Period with or without Cause. For purposes of
this Agreement, "Cause" shall mean:
(i) the willful and continued failure of Executive to perform
substantially Executive's duties with the Company (other than any such failure
resulting from incapacity due to physical or mental illness, and specifically
excluding any failure by Executive, after reasonable efforts, to meet
performance expectations), after a written demand for substantial performance is
delivered to Executive by the Board which specifically identifies the manner in
which the Board believes that Executive has not substantially performed
Executive's duties, or
(ii) the willful engaging by Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by Executive in bad faith or without reasonable belief that Executive's
action or omission was in the best interests of the Company. Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the
Board or based upon the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by Executive in good faith and in
the best interests of the Company. The cessation of employment of Executive
shall not be deemed to be for Cause unless and until there shall have been
delivered to Executive a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of the Board
(excluding Executive if Executive is a director) at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to
Executive and Executive is given an opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board,
Executive is guilty of the conduct described in subparagraph (i) or (ii) above,
and specifying the particulars thereof in detail.
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(c) Termination by Executive. Executive's employment may be terminated by
Executive for Good Reason or no reason. For purposes of this Agreement, "Good
Reason" shall mean:
(i) without the written consent of Executive, the assignment to Executive
of any duties materially inconsistent with Executive's position (including
status, offices, titles and reporting requirements), authority, duties or
responsibilities as in effect on the Effective Date, or any other action by the
Company which results in a material diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by
Executive;
(ii) a reduction by the Company in Executive's Base Salary and benefits as
in effect on the Effective Date or as the same may be increased from time to
time, unless a similar reduction is made in salary and benefits of Peer
Executives generally;
(iii) after the occurrence of a Change in Control, the Company's requiring
Executive to be based at any office or location other than in the greater
Jacksonville, Florida metropolitan area or the Company's requiring Executive to
travel on Company business to a substantially greater extent than required
immediately prior to the Effective Date; or
(iv) any failure by the Company to comply with and satisfy Section 14(b)
of this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause, or by
Executive for Good Reason, shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 15(f) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written notice
that (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than 30 days after
the giving of such notice). The failure by Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of Executive or the
Company, respectively, hereunder or preclude Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing Executive's
or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if Executive's
employment is terminated by the Company for Cause, or by Executive for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified therein (which date shall be not more than 30 days after the giving of
such notice), as the case may be, (ii) if
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Executive's employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which the Company
notifies Executive of such termination or any later date specified in the Notice
of Termination (which date shall be not more than 30 days after the giving of
such notice), and (iii) if Executive's employment is terminated by reason of
death, Retirement or Disability, the Date of Termination shall be the date of
death or Retirement of Executive or the Disability Effective Date, as the case
may be.
8. Obligations of the Company upon Termination.
(a) Termination by Executive for Good Reason; Termination by the Company Other
Than for Cause, Death or Disability. If, during the Employment Period, the
Company shall terminate Executive's employment other than for Cause, death or
Disability, or Executive shall terminate employment for Good Reason within a
period of 30 days after the occurrence of the event giving rise to Good Reason,
then in consideration of Executive's services rendered prior to such termination
and as reasonable compensation for his compliance with the Restrictive Covenants
in Section 13 hereof, and, with respect to the payments and benefits described
in clauses (i)(B) and (ii) below, only if Executive executes a Release in
substantially the form of Exhibit A hereto (the "Release"):
(i) the Company shall pay to Executive in a lump sum in cash within 30
days after the Date of Termination or, with respect to the prorata bonus
described in clause A(2) below, within 30 days after the determination of the
bonus amount, the aggregate of the following amounts:
A. the sum of (1) Executive's Base Salary through the Date of
Termination to the extent not theretofore paid, (2) if the Date of
Termination occurs after or in connection with the occurrence of a Change
in Control, the product of (x) Executive's annual bonus that would have
been payable with respect to the fiscal year in which the Date of
Termination occurs (determined at the end of such year based on actual
performance results through the end of such year) and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through
the Date of Termination, and the denominator of which is 365, and (3) any
accrued vacation pay, to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2) and (3) shall be hereinafter referred
to as the "Accrued Obligations"); and
B. the amount equal to three-quarters (0.75) times the sum of (1)
Executive's annual Base Salary in effect as of the Date of Termination, and
(2) Executive's target annual bonus for the year in which the Date of
Termination occurs ("Target Bonus") (such amount is referred to as the
"Severance Payment"); provided, however, that if the Date of Termination
occurs after or in connection with the occurrence of a Change in Control,
the Severance Payment shall be the amount equal to one and one-half (1.5)
times the sum of (1) Executive's annual Base Salary in effect as of the
Date of Termination, and (2) Executive's Target
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Bonus; and
(ii) for nine months after Executive's Date of Termination (or eighteen
months in the event that the Date of Termination occurs after or in connection
with the occurrence of a Change in Control), or such longer period as may be
provided by the terms of the appropriate plan, program, practice or policy, the
Company shall continue benefits to Executive and/or Executive's family at least
equal to those which would have been provided to them in accordance with the
welfare plans, programs, practices and policies described in Section 5(c) of
this Agreement if Executive's employment had not been terminated or, if more
favorable to Executive, as in effect generally at any time thereafter with
respect to Peer Executives and their families, provided, however, that if
Executive becomes re-employed with another employer and is eligible to receive
medical or other welfare benefits under another employer provided plan, the
medical and other welfare benefits described herein shall be secondary to those
provided under such other plan during such applicable period of eligibility
("Welfare Benefits"); and
(iii) the Company shall, within 30 days of receipt of reasonably documented
invoices therefor, reimburse Executive's actual cost (not to exceed $15,000) for
outplacement expenses incurred within one year after the Date of Termination;
and
(iv) to the extent not theretofore paid or provided, the Company shall
timely pay or provide to Executive any other amounts or benefits required to be
paid or provided or which Executive is eligible to receive under any plan,
program, policy or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits").
(b) Death. If Executive's employment is terminated by reason of Executive's
death during the Employment Period, this Agreement shall terminate without
further obligations to Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations (excluding the pro-rata bonus
described in clause 2 of Section 8(a)(i)(A)) and the timely payment or provision
of Other Benefits. Accrued Obligations shall be paid to Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the term Other
Benefits as used in this Section 8(b) shall include, without limitation, and
Executive's estate and/or beneficiaries shall be entitled to receive, benefits
under such plans, programs, practices and policies relating to death benefits,
if any, as applicable to Executive on the Date of Termination.
(c) Disability. If Executive's employment is terminated by reason of
Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to Executive, other than for payment of
Accrued Obligations (excluding the pro-rata bonus described in clause 2 of
Section 8(a)(i)(A)) and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to Executive in a lump sum in cash within 30
days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as used in this Section 8(c) shall include,
without
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limitation, and Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits under such plans, programs, practices
and policies relating to disability, if any, as applicable to Executive on the
Date of Termination.
(d) Retirement. If Executive's employment is terminated by reason of
Executive's Retirement during the Employment Period, this Agreement shall
terminate without further obligations to Executive, other than for payment of
Accrued Obligations (excluding the pro-rata bonus described in clause 2 of
Section 8(a)(i)(A)) and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to Executive in a lump sum in cash within 30
days of the Date of Termination. With respect to the provision of Other
Benefits, the term Other Benefits as used in this Section 8(d) shall include,
without limitation, and Executive shall be entitled after the Date of
Termination to receive, retirement and other benefits under such plans,
programs, practices and policies relating to retirement, if any, as applicable
to Executive on the Date of Termination.
(e) Cause or Voluntary Termination without Good Reason. If Executive's
employment shall be terminated for Cause during the Employment Period, or if
Executive voluntarily terminates employment during the Employment Period without
Good Reason, this Agreement shall terminate without further obligations to
Executive, other than for payment of Accrued Obligations (excluding the pro-rata
bonus described in clause 2 of Section 8(a)(i)(A)) and the timely payment or
provision of Other Benefits.
9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which Executive may qualify, nor, subject to Section 15(d), shall anything
herein limit or otherwise affect such rights as Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
10. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and except as
set forth below, in the event it shall be determined that any benefit, payment
or distribution by the Company to or for the benefit of Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 10) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
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"Excise Tax"), then: Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by Executive
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section 10(a), if it shall be determined that Executive is entitled to a
Gross-Up Payment, but that Executive, after taking into account the Payments and
the Gross-Up Payment, would not receive a net after-tax benefit of at least
$50,000 (taking into account both income taxes and any Excise Tax) as compared
to the net after-tax proceeds to Executive resulting from an elimination of the
Gross-Up Payment and a reduction of the Payments, in the aggregate, to an amount
(the "Reduced Amount") such that the receipt of Payments would not give rise to
any Excise Tax, then no Gross-Up Payment shall be made to Executive and the
Payments, in the aggregate, shall be reduced to the Reduced Amount. Executive
may select the Payments to be limited or reduced.
(b) Subject to the provisions of Section 10(c), all determinations required to
be made under this Section 10, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be used
in arriving at such determination, shall be made by the Company's regular
independent accounting firm at the expense of the Company or, at the election
and expense of Executive, another nationally recognized independent accounting
firm (the "Accounting Firm") which shall provide detailed supporting
calculations. Any determination by the Accounting Firm shall be binding upon the
Company and Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 10(c) and Executive thereafter
is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive.
(c) Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
the Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than ten business days after Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which
it gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the Company
notifies Executive in writing prior to the expiration of such period that it
desires to contest such claim, Executive shall:
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(i) give the Company any information reasonably requested by the Company
relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation of the foregoing provisions of
this Section 10(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by the Company
pursuant to Section 10(c), Executive becomes entitled to receive any refund with
respect to such claim, Executive shall (subject to the Company's complying with
the requirements of Section 10(c)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto).
11. Costs of Enforcement. In any action taken in good faith relating to the
enforcement of this Agreement or any provision herein after the occurrence of a
Change in Control,
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Executive shall be entitled to be paid any and all costs and expenses incurred
by him in enforcing or establishing his rights thereunder, including, without
limitation, reasonable attorneys' fees, whether suit be brought or not, and
whether or not incurred in trial, bankruptcy or appellate proceedings. In all
other circumstances, each party in any such action shall pay his or its own such
costs and expenses.
12. Representations and Warranties. Executive hereby represents and warrants to
the Company that Executive is not a party to, or otherwise subject to, any
covenant not to compete (other than as contained herein) with any person or
entity, and Executive's execution of this Agreement and performance of his
obligations hereunder will not violate the terms or conditions of any contract
or obligation, written or oral, between Executive and any other person or
entity.
13. Restrictions on Executive's Conduct.
(a) General. Executive and the Company understand and agree that the purpose of
the provisions of this Section 13 is to protect legitimate business interests of
the Company, as more fully described below, and is not intended to eliminate
Executive's post-employment competition with the Company per se, nor is it
intended to impair or infringe upon Executive's right to work, earn a living, or
acquire and possess property from the fruits of his labor. Executive hereby
acknowledges that Executive has received good and valuable consideration for the
post-employment restrictions set forth in this Section 13 in the form of the
compensation and benefits provided for herein. Executive hereby further
acknowledges that the post-employment restrictions set forth in this Section 13
are reasonable and that they do not, and will not, unduly impair Executive's
ability to earn a living after the Date of Termination. Therefore, subject to
the limitations of reasonableness imposed by law, Executive shall be subject to
the restrictions set forth in this Section 13.
(b) Definitions. The following capitalized terms used in this Section 13 shall
have the meanings assigned to them below, which definitions shall apply to both
the singular and the plural forms of such terms:
"Competitive Position" means any position with a Competitor as a Principal
or Representative in which Executive will use or is likely to use any
Confidential Information or Trade Secrets of the Company, or in which Executive
has duties for, provides services to, or otherwise assists such Competitor where
such duties, services or assistance involve Competitive Services.
"Competitive Services" means any activities engaged in by the Company as of
the Date of Termination that relate directly to (a) the distribution of medical
supplies, equipment and pharmaceuticals to (i) primary care and other
office-based physicians, or (ii) nursing homes, extended care facilities,
assisted living facilities, or home care or visiting nurse associations or
agencies, or (b) the distribution of medical diagnostic imaging supplies,
chemicals, equipment and service to the acute care and alternate care
-12-
market; provided, however, that Competitive Services shall not include (x) the
manufacture of medical supplies, equipment or pharmaceuticals or medical
diagnostic imaging supplies, chemicals or equipment (collectively "Medical
Products"), (y) the provision of e-commerce or internet services with respect to
the dissemination of information or services related to the distribution of
Medical Products (but which is not the distribution of Medical Products), or (z)
the provision of group purchasing, contract pricing or cost analyses for
physicians or medical practices.
"Competitor" means any Person engaged, wholly or in material part, in
Competitive Services.
"Confidential Information" means all information regarding the Company, its
activities, business or clients that is the subject of reasonable efforts by the
Company to maintain its confidentiality and that is not generally disclosed by
practice or authority to persons not employed by the Company, but that does not
rise to the level of a Trade Secret. "Confidential Information" shall include,
but is not limited to, financial plans and data concerning the Company;
management planning information; business plans; operational methods; market
studies; marketing plans or strategies; product development techniques or plans;
customer lists; details of customer contracts; current and anticipated customer
requirements; past, current and planned research and development; business
acquisition plans; and new personnel acquisition plans. "Confidential
Information" shall not include information that has become generally available
to the public by the act of one who has the right to disclose such information
without violating any right or privilege of the Company. This definition shall
not limit any definition of "confidential information" or any equivalent term
under state or federal law.
"Person" means any individual or any corporation, partnership, joint
venture, limited liability company, association or other entity or enterprise.
"Principal or Representative" means a principal, owner, partner,
shareholder, joint venturer, investor, member, trustee, director, officer,
manager, employee, agent, representative or consultant.
"Protected Customers" means any Person to whom the Company has sold its
products or services or to whom the Company has submitted a written proposal to
sell its products or services during the twelve (12) months prior to the Date of
Termination.
"Protected Employees" means employees of the Company who were employed by
the Company at any time within six (6) months prior to the Date of Termination.
"Restricted Period" means the term of Executive's employment hereunder and
a period extending until eighteen (18) months from the Date of Termination.
"Restricted Territory" means the territory in which Executive provided
Competitive Services to the Company at any time during the twenty-four (24)
month period prior to
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the Date of Termination.
"Restrictive Covenants" means the restrictive covenants contained in
Section 13(d) hereof.
"Trade Secret" means all information, without regard to form, including,
but not limited to, technical or nontechnical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, distribution lists or a list of
actual or potential customers, advertisers or suppliers which is not commonly
known by or available to the public and which information: (A) derives economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use; and (B) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. Without limiting the
foregoing, Trade Secret means any item of confidential information that
constitutes a "trade secret(s)" under the common law or statutory law of the
State of Florida.
(c) Protectable Employer Interests. Executive and the Company acknowledge and
agree as follows: (i) that Executive's services on behalf of the Company require
special expertise and talent in the provision of Competitive Services and,
pursuant to Executive's employment with the Company, the Company shall devote
time and money to the enhancement of Executive's professional skills and
education through specialized training; (ii) that Executive is in a position of
trust and responsibility and will have access to a substantial amount of
Confidential Information and Trade Secrets belonging to the Company; (iii) that,
during the term of Executive's employment by the Company, Executive will develop
substantial relationships with prospective and existing customers of the
Company; and (iv) that as a manager of the Company, Executive will be the
repository of a substantial portion of the goodwill of the Company.
(d) Restrictive Covenants.
(i) Restriction on Disclosure and Use of Confidential Information and
Trade Secrets. Executive understands and agrees that the Confidential
Information and Trade Secrets constitute valuable assets of the Company and its
affiliated entities, and may not be converted to Executive's own use.
Accordingly, Executive hereby agrees that Executive shall not, directly or
indirectly, at any time during the Restricted Period reveal, divulge, or
disclose to any Person not expressly authorized by the Company any Confidential
Information, and Executive shall not, directly or indirectly, at any time during
the Restricted Period use or make use of any Confidential Information in
connection with any business activity. For a period of five years after the date
of Termination, Executive shall not directly or indirectly transmit or disclose
any Trade Secret of the Company to any Person, and shall not make use of any
such Trade Secret, directly or indirectly, for himself or for others, without
the prior written consent of the Company. Executive and the Company acknowledge
and agree that this Section 13 is not intended to, and does not, alter either
the Company's rights or Executive's obligations
-14-
under any state or federal statutory or common law regarding trade secrets and
unfair trade practices. Notwithstanding the above, this covenant shall expire
(except with respect to Trade Secrets) upon the occurrence of a Change in
Control.
(ii) Nonsolicitation of Protected Employees. Executive understands and
agrees that the relationship between the Company and each of its Protected
Employees constitutes a valuable asset of the Company and may not be converted
through Executive's solicitation to Executive's own use. Accordingly, Executive
hereby agrees that during the Restricted Period, Executive will not, directly or
indirectly, on his own behalf or as a Principal or Representative of any Person
or otherwise, solicit or induce any Protected Employee to terminate his or her
employment relationship with the Company or to enter into any relationship of
employment, agency or independent contractorship with any other Person.
Notwithstanding the above, this covenant shall expire upon the occurrence of a
Change in Control.
(iii) Restriction on Relationships with Protected Customers. Executive
understands and agrees that the relationship between the Company and each of its
Protected Customers constitutes a valuable asset of the Company and may not be
converted through Executive's solicitation to Executive's own use. Accordingly,
Executive hereby agrees that, during the Restricted Period, Executive will not,
without the prior written consent of the Company, directly or indirectly, on his
own behalf or as a Principal or Representative of any Person, solicit, divert,
or attempt to solicit or divert a Protected Customer for the purpose of
providing or selling Competitive Services; provided, however, that the
prohibition of this covenant shall apply only to Protected Customers with whom
Executive had Material Contact on the Company's behalf during the twelve (12)
months immediately preceding the Date of Termination. For purposes of this
Agreement, Executive had "Material Contact" with a Protected Customer if (a)
Executive had business dealings with the Protected Customer on the Company's
behalf; (b) Executive was responsible for supervising or coordinating the
dealings between the Company and the Protected Customer; or (c) Executive
obtained Trade Secrets or Confidential Information about the customer as a
result of Executive's association with the Company. Notwithstanding the above,
this covenant shall expire upon the occurrence of a Change in Control.
(iv) Noncompetition with the Company. Executive understands and agrees
that he is capable of obtaining gainful, lucrative and desirable employment that
does not violate the restrictions contained in this Agreement. In consideration
of the compensation and benefits being paid and to be paid by the Company to
Executive hereunder, Executive hereby agree that, during the Restricted Period,
Executive will not, without prior written consent of the Company, directly or
indirectly seek or obtain a Competitive Position in the Restricted Territory
with a Competitor; provided, however, that the provisions of this Agreement
shall not be deemed to prohibit the ownership by Executive of any securities of
the Company or its affiliated entities or not more than five percent (5%) of any
class of securities of any corporation having a class of securities registered
pursuant to the Securities Exchange Act of 1934, as amended. Notwithstanding the
above, this covenant
-15-
shall expire upon the occurrence of a Change in Control.
(e) Exceptions from Disclosure Restrictions. Anything herein to the contrary
notwithstanding, Executive will not be restricted from disclosing or using
Confidential Information that: (i) is or becomes generally available to the
public other than as a result of an unauthorized disclosure by Executive or
Executive's agent; (ii) becomes available to Executive in a manner that is not
in contravention of applicable law from a source (other than the Company or its
affiliated entities or one of its or their officers, employees, agents or
representatives) that is not bound by a confidential relationship with the
Company or its affiliated entities or by a confidentiality or other similar
agreement; (iii) was known to Executive on a non-confidential basis and not in
contravention of applicable law or a confidentiality or other similar agreement
before its disclosure to Executive by the Company or its affiliated entities or
one of its or their officers, employees, agents or representatives; or (iv) is
required to be disclosed by law, court order or other legal process; provided,
however, that in the event disclosure is required by law, Executive will provide
the Company with prompt notice of such requirement so that the Company may seek
an appropriate protective order prior to any such required disclosure by
Executive.
(f) Reasonableness. The covenants contained in this Section 13 are considered
by the parties hereto to be fair, reasonable and necessary for the protection of
the legitimate business interests of the Company.
(g) Enforcement of Restrictive Covenants.
(i) Rights and Remedies Upon Breach. In the event Executive breaches, or
threatens to commit a breach of, any of the provisions of the Restrictive
Covenants, the Company shall have the following rights and remedies, which shall
be independent of any others and severally enforceable, and shall be in addition
to, and not in lieu of, any other rights and remedies available to the Company
at law or in equity: (1) the right and remedy to enjoin, preliminarily and
permanently, Executive from violating or threatening to violate the Restrictive
Covenants and to have the Restrictive Covenants specifically enforced, it being
agreed that any breach or threatened breach of the Restrictive Covenants would
cause irreparable injury to the Company and that money damages would not provide
an adequate remedy to the Company; and (2) the right and remedy to cease any
further Severance Payment or provision of Welfare Benefits to Executive under
Section 8 of this Agreement and to require Executive to account for and pay over
to the Company any Severance Payment previously paid to Executive under Section
8.
(ii) Severability of Covenants. Executive acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in time and scope and in all
other respects. If any court determines that any of the Restrictive Covenants,
or any part thereof, are invalid or unenforceable, the remainder of the
Restrictive Covenants will not thereby be affected and will be given full
effect, without regard to the invalid portions.
-16-
(iii) Reformation. Executive and the Company agree that it is their mutual
intention that the Restrictive Covenants be enforced in accordance with their
terms to the maximum extent possible under applicable law. Executive and the
Company further agree that, in the event any court of competent jurisdiction
shall find that any provision hereof is not enforceable in accordance with its
terms, the court shall reform the Restrictive Covenants such that they will be
enforceable to the maximum extent permissible at law.
(iv) Survival of the Restrictive Covenants. Executive and the Company
agree that the terms of this Section 13 shall survive the termination or
expiration of the Employment Period, unless expressly terminated by a writing
signed by both parties hereto, which makes specific reference to this Section
13.
14. Assignment and Successors.
(a) Executive. This Agreement is personal to Executive and without the prior
written consent of the Company shall not be assignable by Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by Executive's legal representatives.
(b) The Company. This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns. The Company will require any
successor to all or substantially all of the business and/or assets of the
Company (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement, "the Company"
shall mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law or otherwise.
15. Miscellaneous.
(a) Waiver. Failure of either party to insist, in one or more instances, on
performance by the other in strict accordance with the terms and conditions of
this Agreement shall not be deemed a waiver or relinquishment of any right
granted in this Agreement or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by the party making the waiver.
(b) Severability. If any provision or covenant, or any part thereof, of this
Agreement should be held by any court to be invalid, illegal or unenforceable,
either in whole or in part, such invalidity, illegality or unenforceability
shall not affect the validity, legality or enforceability of the remaining
provisions or covenants, or any part thereof, of this Agreement, all of which
shall remain in full force and effect.
-17-
(c) Other Agents. Nothing in this Agreement is to be interpreted as limiting
the Company from employing other personnel on such terms and conditions as may
be satisfactory to it.
(d) Entire Agreement. Except as provided herein, this Agreement contains the
entire agreement between the Company and Executive with respect to the subject
matter hereof, and it supersedes and invalidates any previous agreements or
contracts between them which relate to the subject matter hereof. No
representations, inducements, promises or agreements, oral or otherwise, which
are not embodied herein shall be of any force or effect.
(e) Choice of Law; Forum Selection. The validity, interpretation and
performance of this Agreement shall be governed by and controlled in accordance
with the laws of the State of Florida, including said State's choice of law
rules. The parties hereto voluntarily submit themselves to the jurisdiction of
the state or federal district courts in the State of Florida which shall have
exclusive jurisdiction over any case or controversy arising under or in
connection with this Agreement, including with respect to an action to remedy
any breach of or otherwise to enforce the terms and conditions of this
Agreement.
(f) Notices. All notices, requests, demands and other communications required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered or three days after mailing if mailed, first class, certified
mail, postage prepaid:
To Company: PSS World Medical, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: Chief Executive Officer
To Executive: Xxxx Xxxxxxx
0000 Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Any party may change the address to which notices, requests, demands and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
(g) Amendments and Modifications. This Agreement may be amended or modified
only by a writing signed by both parties hereto, which makes specific reference
to this Agreement.
(signatures on following page)
-18-
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Employment Agreement as of the date first above written.
PSS WORLD MEDICAL, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
President and Chief Executive Officer
EXECUTIVE:
By: /s/ Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxxxx
-19-
EXHIBIT A
Form of Release of Claims
-------------------------
This Release ("Release") is granted effective as of the __ day of __________,
____, by Xxxx Xxxxxxx ("Executive") in favor of PSS World Medical, Inc. (the
"Company"). This is the Release referred to that certain Employment Agreement
dated as of October 1, 2002 by and between the Company and Executive (the
"Employment Agreement"). Executive gives this Release in consideration of the
Company's promises and covenants as recited in the Employment Agreement, with
respect to which this Release is an integral part.
1. Release of the Company. Executive, for himself, his successors, assigns,
attorneys, and all those entitled to assert his rights, now and forever hereby
releases and discharges the Company and its respective officers, directors,
stockholders, trustees, employees, agents, parent corporations, subsidiaries,
affiliates, estates, successors, assigns and attorneys (the "Released Parties"),
from any and all claims, actions, causes of action, sums of money due, suits,
debts, liens, covenants, contracts, obligations, costs, expenses, damages,
judgments, agreements, promises, demands, claims for attorney's fees and costs,
or liabilities whatsoever, in law or in equity, which Executive ever had or now
has against the Released Parties arising by reason of or in any way connected
with any employment relationship which existed between the Company or any of its
parents, subsidiaries, affiliates, or predecessors, and Executive. It is
understood and agreed that this Release is intended to cover all actions, causes
of action, claims or demands for any damage, loss or injury arising from the
aforesaid employment relationship, or the termination of that relationship, that
Executive has, had or purports to have, from the beginning of time to the date
of this Release, whether known or unknown, that now exists related to the
aforesaid employment relationship including but not limited to claims for
employment discrimination under federal or state law, except as provided in
Paragraph 2; claims arising under Title VII of the Civil Rights Act, 42 U.S.C.
Section 2002(e), et seq. or the Americans With Disabilities Act, 42 U.S.C.
Section 12101 et seq.; claims for statutory or common law wrongful discharge,
including any claims arising under the Fair Labor Standards Act, 29 U.S.C.
Section 201 et seq.; claims for attorney's fees, expenses and costs; claims for
defamation; claims for wages or vacation pay; claims for benefits, including any
claims arising under the Employee Retirement Income Security Act, 29 U.S.C.
Section 1001, et seq.; and provided, however, that nothing herein shall release
the Company of their obligations to Executive under the Employment Agreement or
any other contractual obligations between the Company or its affiliates and
Executive, or any indemnification obligations to Executive under the Company's
bylaws, articles of incorporation, Florida law or otherwise.
2. Release of Claims Under Age Discrimination in Employment Act. Without
limiting the generality of the foregoing, Executive agrees that by executing
this Release, he has released and waived any and all claims he has or may have
as of the date of this Release for age discrimination under the Age
Discrimination in Employment Act,
29 U.S.C.Section 621, et seq. It is understood that Executive is advised to
consult with an attorney prior to executing this Release; that he in fact has
consulted a knowledgeable, competent attorney regarding this Release; that he
may, before executing this Release, consider this Release for a period of
twenty-one (21) calendar days; and that the consideration he receives for this
Release is in addition to amounts to which he was already entitled. It is
further understood that this Release is not effective until seven (7) calendar
days after the execution of this Release and that Executive may revoke this
Release within seven (7) calendar days from the date of execution hereof.
Executive agrees that he has carefully read this Release and is signing it
voluntarily. Executive acknowledges that he has had twenty one (21) days from
receipt of this Release to review it prior to signing or that, if Executive is
signing this Release prior to the expiration of such 21-day period, Executive is
waiving his right to review the Release for such full 21-day period prior to
signing it. Executive has the right to revoke this Release within seven (7) days
following the date of its execution by him. However, if Executive revokes this
Release within such seven (7) day period, no severance benefit will be payable
to him under the Employment Agreement and he shall return to the Company any
such payment received prior to that date.
EXECUTIVE HAS CAREFULLY READ THIS RELEASE AND ACKNOWLEDGES THAT IT CONSTITUTES A
GENERAL RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS AGAINST THE COMPANY AND ITS
AFFILIATES UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT. EXECUTIVE
ACKNOWLEDGES THAT HE HAS HAD A FULL OPPORTUNITY TO CONSULT WITH AN ATTORNEY OR
OTHER ADVISOR OF HIS CHOOSING CONCERNING HIS EXECUTION OF THIS RELEASE AND THAT
HE IS SIGNING THIS RELEASE VOLUNTARILY AND WITH THE FULL INTENT OF RELEASING THE
COMPANY AND ITS AFFILIATES FROM ALL SUCH CLAIMS.
By:
-------------------------------------
Xxxx Xxxxxxx
Date:
---------------
-2-
